Over half of all new cars sold in the U.S. by 2030 are expected to be electric vehicles. That could put a major strain on our nation’s electric grid, an aging system built for a world that runs on fossil fuels.
Domestic electricity demand in 2022 is expected to increase up to 18% by 2030 and 38% by 2035, according to an analysis by the Rapid Energy Policy Evaluation and Analysis Toolkit, or REPEAT, an energy policy project out of Princeton University. That’s a big change over the roughly 5% increase we saw in the past decade.
“So we’ve got a lot of power demand coming to this country when we really didn’t have any for the last, like, 25 years,” said Rob Gramlich, founder and president of Grid Strategies, a transmission policy group.
While many parts of the economy are moving away from fossil fuels toward electrification — think household appliances such as stoves, and space heating for homes and offices — the transportation sector is driving the increase. Light-duty vehicles, a segment that excludes large trucks and aviation, are projected to use up to 3,360% more electricity by 2035 than they do today, according to Princeton’s data.
But electrification is only an effective decarbonization solution if it’s paired with a major buildout of renewable energy. “So we have both supply-side and demand-side drivers of big grid needs,” Gramlich said.
That means we need major changes to the grid: more high-voltage transmission lines to transport electricity from rural wind and solar power plants to demand centers; smaller distribution lines and transformers for last-mile electricity delivery; and hardware such as inverters that allow customers with home batteries, EVs and solar panels to feed excess energy back into the grid.
Charging electric vehicles is quite electricity intensive. While a direct comparison with appliances depends on many variables, an owner of a new Tesla Model 3 who drives the national average of around 14,000 miles per year would use about the same amount of electricity charging their vehicle at home as they would on their electric water heater over the course of a year, and about 10 times more electricity than it would take to power a new, energy-efficient refrigerator. Larger electric vehicles such as the Ford F-150 Lightning would generally use more electricity than a central AC unit in a large home.
Lydia Krefta, director of clean energy transportation at PG&E, said the utility currently has about 470,000 electric vehicles connected to the grid in its service territory of Northern and Central California and is aiming for 3 million by 2030.
Given that PG&E’s territory covers about 1 in 7 electric vehicles in the U.S., how it handles the EV transition could serve as a model for the nation. It’s no easy task. The utility is tied to a four-year funding cycle for grid infrastructure upgrades, and its last funding request was in 2021. Now that funding will definitely fall short of what’s needed, Krefta said.
Workers for Source Power Services, contracted by Pacific Gas & Electric (PG&E), repair a power transformer in Healdsburg, California, on Thursday, Oct. 31, 2019.
David Paul Morris | Bloomberg | Getty Images
“A lot of the analysis that went into that request came from, like, 2019 or 2020 forecasts, in particular some of those older EV forecasts that didn’t anticipate some of the growth that we believe we’re more likely to see now,” Krefta said. This situation has PG&E applying for numerous state and federal grants that could help it meet its electrification targets.
“I think right now people have an overly simplistic view of what electrification of transportation means,” said Kevala CEO Aram Shumavon. “If done right, it will be phenomenal; if mismanaged, there are going to be a lot of upset people, and that is a real risk. That’s a risk for regulators. That’s a risk for politicians, and that’s a risk for utilities.”
Shumavon said that if grid infrastructure doesn’t keep up with the EV boom, drivers can expect charging difficulties such as long queues or only being able to charge at certain times and places. An overly strained grid will also be more vulnerable to extreme weather events and prone to blackouts, which California experienced in 2020.
The most straightforward way to meet growing electricity demand is to bring more energy sources online, preferably green ones. But though it’s easy to site coal and natural gas plants close to population centers, the best solar and wind resources are usually more rural.
But Gramlich said that while we’re constantly spending money replacing and upgrading old lines, we’re hardly building any new ones. “I think we need probably about $20 [million] or $30 million a year on new capacity, new line miles and new delivery capacity. We’re spending close to zero on that right now.”
“If you just think about a line crossing two or three dozen different utility territories, they have a way to recover their costs on their local system, but they kind of throw up their hands when there’s something that benefits three dozen utilities, and who’s supposed to pay, how much, and how are we going to decide?” Gramlich said.
Permitting is a major holdup as well. All new energy projects must undergo a series of impact studies to evaluate what new transmission equipment is required, how much it will cost and who will pay. But the list of projects stuck in this process is massive. The total amount of electricity generation in the queues, almost all of which is renewable, exceeds the total generating capacity on the grid today.
The Inflation Reduction Act has the potential to cut emissions by about 1 billion tons by 2030, according to Princeton’s REPEAT project. But by this same analysis, if transmission infrastructure buildout doesn’t more than double its historical growth rate of 1% per year, more than 80% of these reductions could be lost.
An ‘in-between period’
Efforts are underway to expedite the energy infrastructure buildout. Most notably, Sen. Joe Manchin, D-W.Va., introduced a permitting reform bill in May after similar measures failed last year. President Joe Biden has thrown his support behind the bill, which would speed up permitting for all types of energy projects, including fossil fuel infrastructure. The politics will be tricky to navigate, though, as many Democrats view the bill as overly friendly to fossil fuel interests.
But even if the pace of permitting accelerates and we start spending big on transmission soon, it will still take years to build the infrastructure that’s needed.
“There’s going to be an in-between period where the need is very high, but the transmission can’t be built during the time period where the need happens, and distributed energy resources are going to play a very active role in managing that process, because no other resources will be available,” Shumavon explained.
That means that resources such as residential solar and battery systems could help stabilize the grid as customers generate their own power and sell excess electricity back to the grid. Automakers are also increasingly equipping their EVs with bidirectional charging capabilities, which allow customers to use their giant EV battery packs to power their homes or provide electricity back to the grid, just like a regular home battery system. Tesla doesn’t currently offer this functionality, but has indicated that it will in the coming years, while other models such as the Ford F-150 Lightning and Nissan Leaf already do.
Ford’s all electric F-150 Lightning offers bidirectional charging, allowing customers to use the truck’s EV battery to power their home.
Ford Motor Company
There will also likely be greater emphasis on energy efficiency and energy timing use. PG&E, for example, is thinking about how to optimize charging times for large electric vehicle fleets.
“One thing that we’re trying to do is to work with some of these companies that are putting in substantial loads to provide flexible load constraints where we can say you can only charge 50 EVs at 7 p.m., but at 2 a.m. you can charge all 100,” Krefta said.
Krefta hopes constraints on charging times are temporary, though, and said that moving forward, PG&E is looking to incentivize consumers through dynamic pricing, in which electricity prices are higher during times of peak demand and lower at off-peak hours. And the utility is working with automakers to figure out how electric vehicles can provide maximum benefit to the grid.
“What kinds of things do you need to do in your garage to enable your vehicle to power your home? How can you leverage your vehicle to charge whenever there’s renewables on the grid and they’re clean and low cost and then discharge back to the grid during the evening hours?” Krefta said it’s questions like these that will help create the green grid of the future.
Startup Figure AI is developing general-purpose humanoid robots.
Figure AI
Figure AI, an Nvidia-backed developer of humanoid robots, was sued by the startup’s former head of product safety who alleged that he was wrongfully terminated after warning top executives that the company’s robots “were powerful enough to fracture a human skull.”
Robert Gruendel, a principal robotic safety engineer, is the plaintiff in the suit filed Friday in a federal court in the Northern District of California. Gruendel’s attorneys describe their client as a whistleblower who was fired in September, days after lodging his “most direct and documented safety complaints.”
The suit lands two months after Figure was valued at $39 billion in a funding round led by Parkway Venture Capital. That’s a 15-fold increase in valuation from early 2024, when the company raised a round from investors including Jeff Bezos, Nvidia, and Microsoft.
In the complaint, Gruendel’s lawyers say the plaintiff warned Figure CEO Brett Adcock and Kyle Edelberg, chief engineer, about the robot’s lethal capabilities, and said one “had already carved a ¼-inch gash into a steel refrigerator door during a malfunction.”
The complaint also says Gruendel warned company leaders not to “downgrade” a “safety road map” that he had been asked to present to two prospective investors who ended up funding the company.
Gruendel worried that a “product safety plan which contributed to their decision to invest” had been “gutted” the same month Figure closed the investment round, a move that “could be interpreted as fraudulent,” the suit says.
The plaintiff’s concerns were “treated as obstacles, not obligations,” and the company cited a “vague ‘change in business direction’ as the pretext” for his termination, according to the suit.
Gruendel is seeking economic, compensatory and punitive damages and demanding a jury trial.
Figure didn’t immediately respond to a request for comment. Nor did attorneys for Gruendel.
The humanoid robot market remains nascent today, with companies like Tesla and Boston Dynamics pursuing futuristic offerings, alongside Figure, while China’s Unitree Robotics is preparing for an IPO. Morgan Stanley said in a report in May that adoption is “likely to accelerate in the 2030s” and could top $5 trillion by 2050.
Concerns about stock valuations in companies tied to artificial intelligence knocked the market around this week. Whether these worries will recede, as they did Friday, or flare up again will certainly be something to watch in the days and weeks ahead. We understand the concerns about valuations in the speculative aspects of the AI trade, such as nuclear stocks and neoclouds. Jim Cramer has repeatedly warned about them. But, in the past week, the broader AI cohort — including real companies that make money and are driving what many are calling the fourth industrial revolution — has been getting hit. We own many of them: Nvidia and Broadcom on the chip side, and GE Vernova and Eaton on the derivative trade of powering these energy-gobbling AI data centers. That’s not what should be happening based on their fundamentals. Outside of valuations, worries also center on capital expenditures and the depreciation that results from massive investments in AI infrastructure. On this point, investors face a choice. You can go with the bears who are glued to their spreadsheets and extrapolating the usable life of tech assets based on history, a seemingly understandable approach, and applying those depreciation rates to their financial models, arguing the chips should be near worthless after three years. Or, you can go with the commentary from management teams running the largest companies driving the AI trade, and what Jim has gleaned from talking with the smartest CEOs in the world. When it comes to the real players driving this AI investment cycle, like the ones we’re invested in, we don’t think valuations are all that high or unreasonable when you consider their growth rates and importance to the U.S., and by extension, the global economy. We’re talking about Nvidia CEO Jensen Huang, who would tell you that advancements in his company’s CUDA software have extended the life of GPU chip platforms to roughly five to six years. Don’t forget, CoreWeave recently re-contracted for H100s from Nvidia, which were released in late 2022. The bears with their spreadsheets would tell you those chips are worthless. However, we know that H100s have held most of their value. Or listen to Lisa Su, CEO of Advanced Micro Devices , who said last week that her customers are at the point now where “they can see the return on the other side” of these massive investments. For our part, we understand the spending concerns and the depreciation issues that will arise if these companies are indeed overstating the useful lives of these assets. However, those who have bet against the likes of Jensen Huang and Lisa Su, or Meta Platforms CEO Mark Zuckerberg, Microsoft CEO Satya Nadella, and others who have driven innovation in the tech world for over a decade, have been burned time and again. While the bears’ concerns aren’t invalid, long-term investors are better off taking their cues from technology experts. AI is real, and it will increasingly lead to productivity gains as adoption ramps up and the technology becomes ingrained in our everyday lives, just as the internet has. We have faith in the management teams of the AI stocks in which we are invested, and while faith is not an investment strategy, that faith is based on a historical track record of strong execution, the knowledge that offerings from these companies are best in class, and scrutiny of their underlying business fundamentals and financial profiles. Siding with these technology expert management teams, over the loud financial expert bears, has kept us on the right side of the trade for years, and we don’t see that changing in the future. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust, including NVDA, AVGO, GEV, ETN, META, MSFT.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets: The S & P 500 bounced back Friday, recovering from the prior session’s sharp losses. The broad-based index, which was still tracking for a nearly 1.5% weekly decline, started off the session a little shaky as Club stock Nvidia drifted lower after the open. It was looking like concerns about the artificial intelligence trade, which have been dogging the market, were going to dominate back-to-back sessions. But when New York Federal Reserve President John Williams suggested that central bankers could cut interest rates for a third time this year, the market jumped higher. Rate-sensitive stocks saw big gains Friday. Home Depot rose more than 3.5% on the day, mitigating a tough week following Tuesday’s lackluster quarterly release. Eli Lilly hit an all-time high, becoming the first drugmaker to reach a $1 trillion market cap. TJX also topped its all-time high after the off-price retailer behind T.J. Maxx, Marshalls, and HomeGoods, delivered strong quarterly results Wednesday. Carry trade: We’re also monitoring developments in Japan, which is dealing with its own inflation problem and questions about whether to resume interest rate hikes. That brings us to the popular Japanese yen carry trade, which is getting squeezed as borrowing costs there are rising. The yen carry trade involves borrowing yen at a low rate, then converting them into, say, dollars, and investing in higher-yielding foreign assets. That’s all well and good when the cost to borrow yen is low. It’s a different story now that borrowing costs in Japan are hitting 30-year highs. When rates rise, the profit margin on the carry trade gets crunched, or vanishes completely. As a result, investors need to get out, which means forced selling and price action that becomes divorced from fundamentals. It’s unclear if any of this is adding pressure to U.S. markets. We didn’t see anything in the recent quarterly earnings reports from U.S. companies to suggest corporate fundamentals are deteriorating in any meaningful way. That’s why we’re looking for other potential external factors, alongside the well-known concerns about artificial intelligence spending, the depreciation resulting from those capital expenditures, and general worries about consumer sentiment and inflation here in America. Wall Street call: HSBC downgraded Palo Alto Networks to a sell-equivalent rating from a hold following the company’s quarterly earnings report Wednesday. Analysts, who left their $157 price target unchanged, cited decelerating sales growth as the driver of the rerating, describing the quarter as “sufficient, not transformational.” Still, the Club name delivered a beat-and-raise quarter, which topped estimates across every key metric. None of this stopped Palo Alto shares from falling on the release. We chalked the post-earnings decline up to high expectations heading into the quarter, coupled with investor concerns over a new acquisition of cloud management and monitoring company Chronosphere. Palo Alto is still working to close its multi-billion-dollar acquisition of identity security company CyberArk , announced in July. HSBC now argues the stock’s risk-versus-reward is turning negative, with limited potential for upward estimate revisions for fiscal years 2026 and 2027. We disagree with HSBC’s call, given the momentum we’re seeing across Palo Alto’s businesses. The cybersecurity leader is dominating through its “platformization” strategy, which bundles its products and services. Plus, Palo Alto keeps adding net new platformizations each quarter, converting customers to use its security platform, and is on track to reach its fiscal 2030 target. We also like management’s playbook for acquiring businesses just before they see an industry inflection point. With Chronosphere, Palo Alto believes the entire observability industry needs to change due to the growing presence of AI. We’re reiterating our buy-equivalent 1 rating and $225 price target on the stock. Up next: There are no Club earnings reports next week. Outside of the portfolio, Symbotic, Zoom Communications , Semtech , and Fluence Energy will report after Monday’s close. Wall Street will also get a slew of delayed economic data during the shortened holiday trading week. U.S. retail sales and September’s consumer price index are scheduled for release early Tuesday. Durable goods orders and the Conference Board consumer sentiment are released on Wednesday morning. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
